File under Famous Last Words: For Washington "the age of easy hypocrisy is over"

October  30; DW (Deutsche Welle, Germany's international broadcaster): For US, 'the age of easy hypocrisy is over' 

In the age of WikiLeaks and revelations by the likes of Edward Snowden, the US can no longer get away with hypocrisy as a strategic tool on the world stage, [American] political scientist Henry Farrell tells DW [...]

January 17; Reuters: Obama bans spying on leaders of U.S. allies

February 23; DW:  Report: NSA spying on Merkel aides after Obama said U.S. wouldn't spy on Merkel anymore

[...]
US intelligence switched to spying on senior German officials after last year's order from President Barack Obama to stop eavesdropping on Merkel, the Bild am Sonntag (BamS) newspaper said on Sunday.

"We have had the order not to miss out on any information now that we are no longer able to monitor the chancellor's communication directly," said a source described by BamS as a high-ranking employee of the National Security Agency (NSA). [...]

I guess it didn't occur to the White House that even though Ed Snowden is safely boxed in, in Russia, where he's under orders from President Vladimir Putin not to leak new damaging information about the U.S. government, that new leaks can come from anywhere now, even the upper echelon at NSA.  This was one of Henry Farrell's points to DW, and also in a paper he co-authored for Foreign Affairs magazine on the same theme.  From the DW interview (see the DW site for link to the paper) :

DW: What's your advice to the US, given their self-imposed objective of being a global liberal role model?

Farrell: The age of easy hypocrisy is over. The US could go in one of two directions. It could bring its rhetoric in line with its behavior. So, rather than pretending to adhere to various broad liberal norms, the US could, when it's in its interest, abrogate these norms. But that would be problematic, as the US has created a liberal order, in which it's going to have a much tougher time of it, if other states start behaving in the same way, then many of the principles the US has come up with, which make life easier for the US, are going to be far more difficult to deliver on.

DW: What's the alternative?

Farrell: The alternative is for the US to change its behavior to bring it more in line with the commitments and the norms that it formally declares. It's going to be more difficult, but it's the better option long-term. It allows the US to maintain the kind of broad consensus the US has been able to work with quite successfully in the past.
[...]

That NSA continued to spy on Merkel by monitoring the phones of officials she speaks with, even after the U.S. President declared spying on her wouldn't continue, suggests the U.S. government still has a way to go before it understands it needs to change its behavior.

I'll concede that Farrell might have called it right in that hypocrisy on an official level is no longer quite as easy as it was in the pre-Snowden era.  The question is the price that Americans are having to pay in the attempt to keep their government halfway honest. Farrell observes that "the whistleblowers are acting like the small boy [from the story The Emperor's new clothes] who points out the emperor's nakedness when no one else dared speak up."  I'm sorry but I don't recall that small boy facing charges of treason and espionage for daring to speak out.  Edward Snowden has had to risk his freedom and even his life to do the job that the U.S. Congress should have done.  How many Americans can reasonably be expected to do that?

This isn't a criticism of Henry Farrell's entire analysis; I think he makes some good points in other parts of the interview.  But he's dreaming if he thinks that whistleblowers and watchdog organizations such as the ACLU are enough manpower to keep a government that shows no inclination toward honesty on the right side of the law not to mention the Constitution.

The watchdogs are so stretched that I'm now in the position where I have to thank Al-Jazeera America for filing a FOIA to get hold of an NSA propaganda talking points memorandum. "Sound Bites That Resonate," which NSA cooked up in the attempt to persuade the American public that a surveillance police state is in its best interests.
 
What next?  Do we have to press every American adult into volunteering five hours a day to file FOIAs?  Or should we just reverse the surveillance state?  Instead of surveilling the public, install CCTVs in every U.S. government office and home of every official, and every golf course and restaurant where officials congregate? 

However, that would leave the problem of who's going to monitor the CCTV tapes on a daily basis.  There are only so many people in the United States.  And they have things to do other than watch their government. The whole point of a representative government is that the people don't have to do everything themselves.  But if it turns out that this is the case it's time to rethink our type of government.
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Your tax money at work: U.S., British spies in cahoots to collect and store

The latest revelation from the Snowden Files.  Man, when he said "Truth is coming," nobody had any idea at the time how much and what kind of truth he was talking about. Imagine the tax money that's been sunk into just this one project to secretly violate privacy of individual citizens and with no justification.
 
Think of what it means.  Hundreds of millions of hardworking people are making it possible for bottom feeders in government to earn a good living -- with good health benefits, vacation pay, and generous pension -- courtesy of the tax collection system.

I've linked to the Salon report on the situation even though it leans heavily on a Guardian report for the source document. But I like the phrase in the Salon report, "totalized surveillance."  First time I've come across it:

Civil liberties defenders have also stressed that the Optic Nerve program constitutes a profound violation of privacy and reflects the troubling state of totalized surveillance constitutive of our time.

“This is a truly shocking revelation that underscores the importance of the debate on privacy now taking place and the reforms being considered,” said Alex Abdo, staff attorney with the American Civil Liberties Union’s National Security Project. “In a world in which there is no technological barrier to pervasive surveillance, the scope of the government’s surveillance activities must be decided by the public, not secretive spy agencies interpreting secret legal authorities. This report also raises troubling questions about the NSA’s complicity in what is a massive and unprecedented violation of privacy. We need to know more about what the NSA knew, and what role it played.”

Um, is NSA IG George Ellard calling the NSA Director a "wacko bureaucrat?"

On Tuesday  the NSA Inspector General, in a spirited defense of his office's record of handling complaints by NSA employees, got his tongue tangled in the bungee cord.  This was during the course of his heated argument that Ed Snowden should have come to him with his complaints rather than stealing highly classified government property to make his points: 

“The losses…were not the result of some wacko bureaucrat wanting to classify everything and anything.”

All right; let's untangle this.  By "losses" Dr George Ellard meant that Snowden's theft had been a catastrophic blow to U.S. national security. By "result" Ellard meant his idea of Snowden's rationale for the theft, which he dismissed as a baseless fear; i.e., a "wacko bureaucrat wanting to classify everything and anything.”
 
But the whole reason Snowden had to risk his freedom and even his life to steal a mountain of government property was because not even the Chairman of the Joint Chiefs of Staff would have believed him without proof that under the direction of Gen. Keith B. Alexander the National Security Agency was in the process of collecting and storing every single human utterance in the entire world that was digitized. 

George Ellard wouldn't have believed him, either, because Ellard doesn't have the security clearances to have seen what Snowden saw during the course of his work at NSA.  As I pointed out in the Genie post, only the topmost echelon at NSA had the big picture -- exact knowledge of how much and what kind of data was being collected by NSA. 

The rest, to include the White House, Congress and Pentagon, even with top security clearances only had a vague understanding that Alexander had run away with the metadata concept of intelligence gathering.  This is because a complete understanding would have meant falling down the rabbit hole and facing the Red Queen.  What started out as a great idea that Alexander had developed and applied in a battlespace -- Iraq -- had snowballed, if you'll pardon the expression, into an idée fixe in which he redesignated the battlespace as "everywhere."  He set out to collect and store every and any utterance made via digital communications. And because this was being done in the name of national defense, "classified" was stamped on everything and anything that was collected and stored!

The result was the mother of all Catch-22 rules: Because everything is secret there are no secrets but you will be jailed for telling no secrets. Ergo, Snowden's complaints, if he'd taken them to the IG,  would have been thrown out on the grounds that they were ipso facto mooted or dispo fatso prima facie, whichever applied. 

Put another way: within less than a decade the system of classifying information as secret was made obsolete by the metadata approach to intelligence gathering, as implemented by the NSA under Alexander's direction.  It was no longer possible to distinguish between secret and non-secret when even the most mundane and superfluous data had to be classified as secret merely by the act of storing it for possible future retrieval.
  
Instead of confronting the dilemma, the Congress, White House and U.S. military command kicked the can down the road.  But because nature abhors a vacuum Keith Alexander kept the National Security Agency busy filling up the boundless.
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Tale of NSA Department, Ed Snowden, the Magic Lamp and the Stovepipe

The NSA Department and the Magic Lamp

Set aside the techno-babble and the tale of the purloined password.(1)  Edward Snowden got access to top secret levels of surveillance at NSA through the most simple, nontechnical means imaginable, and all he got all the help he needed from one of human nature's most famous weaknesses.  Here's how it happened, as told to Forbes data privacy columnist Andy Greenberg by a colleague of Snowden's at NSA, whose name for understandable reasons had to be withheld for publication. If you're already familiar with the account, which was published December 16 under the title An NSA Co-Worker Remembers The Real Edward Snowden: "A Genius Among Geniuses," bear with me while I quote certain passages; I'm going to analyze them in a way I'm pretty sure hasn't been done before.

[...]
"Before coming to NSA Hawaii, Snowden had impressed NSA officials by developing a backup system that the agency had widely implemented in its codebreaking operations.

He also frequently reported security vulnerabilities in NSA software. Many of the bugs were never patched.[2] 

Snowden had been brought to Hawaii as a cybersecurity expert working for Dell’s services division but due to a problem with the contract was reassigned to become an administrator for the Microsoft intranet management system known as Sharepoint.

Impressed with his technical abilities, Snowden’s managers decided that he was the most qualified candidate to build a new web front-end for one of its projects, despite his contractor status. As his coworker tells it, he was given full administrator privileges, with virtually unlimited access to NSA data.

“Big mistake in hindsight,” says Snowden’s former colleague. “But if you had a guy who could do things nobody else could, and the only problem was that his badge was green [contractor] instead of blue [employee], what would you do?”
[...]

So those who've claimed that Snowden didn't have the "authorities" or technical ability to access certain NSA files were misinformed or dissembling.  Yes he did have the authorities, and there was no need for him to figure out how to break into any security level at NSA.  Snowden's managers simply handed him the keys to the kingdom.

This means there was no need for Snowden to work out subterfuges to access the files -- a point the colleague emphasized in another part in the account.

Here one can be forgiven for asking if his superiors were crazy to give that much power to a contractor (technically, a subcontractor). The answer in this particular case is that they didn't quite see him as a contractor.  They thought they'd stumbled across a magic lamp with a genie inside.  In a way, they had:

“That kid was a genius among geniuses,” says the NSA staffer. “NSA is full of smart people, but anybody who sat in a meeting with Ed will tell you he was in a class of his own …I’ve never seen anything like it.”

The colleague also said that Snowden kept a copy of the U.S. Constitution on his desk at NSA to reference when he argued about the legality of certain NSA surveillance methods, and it seems he argued frequently.  Didn't Snowden's superiors find this troubling?  So the genie blew off steam on occasion. Genies do such things.

Snowden also wore at work a hoodie with a logo that was a clear criticism of the agency's surveillance methods. Well, genies are known to dress strangely.
   
And while the colleague's account doesn't mention this, according to Snowden he did everything but rent a marching band to alert his superiors and coworkers at NSA to the kind of surveillance programs he was finding after he'd been given access to the most top secret files, and to explicitly state that he was deeply troubled by his findings.(3)  There is much in the public record to suggest his claim is true.

Even his postings over a period of years at Ars Technica website clearly indicate that this is someone who doesn't believe in stewing in silence. Once he got access to certain files it would have been completely in character for Snowden to show his superiors at NSA what he was finding and fume, 'Look at this! This is illegal!'

But of course matters of law are seen differently by a being whose home is a lamp.
 
While they didn't put it quite that way, that was how his superiors blinded themselves to the fact that Ed Snowden had "security risk" stamped all over him.  They'd become experts on genie behavior, you understand.
  
Translation: Snowden's superiors had stumbled across a brilliant "kid" who was going to help them pull off a special project, one that would put a feather in the cap of at least one department at the Hawaii branch office.

So at the bottom of the heist of the century is an ageless story, told in countless fables, fairy tales, myths and legends, of acquisitiveness overpowering caution.
 
Does this mean the supervisors in question shouldn't faulted for being human?  Actually every employee manual should provide instructions on what to do if you find a mysterious lamp in the parking garage.  Take it to a homeless shelter or a destitute widow; under no circumstances bring it into the office and say let's see what happens if we shake it.

If it wasn't in the manual, then technically the NSA human resources department is to blame for the whole thing. However, there was something else at work in addition to a magic lamp, something that would raise an eyebrow among those who constantly scan the horizon for Signs and Portents -- these types the least likely to read Forbes, this writer being an exception. Go over the NSA employee's account with a fine comb and you will note an astounding run of accidental incidents, convergences of events and coincidences,  a run that couldn't be replicated in a million years.

Here I'm reminded of a saying at NSA:  "In God we trust. All others we surveil."

Ah, but the question is whether God trusts NSA.

From that viewpoint, and considering the incredible and one might even say mysterious run of luck at Edward Snowden's back, I don't think his supervisors at the NSA Hawaii branch office should continue to beat themselves up for being fools.  There are times when the play's the thing and the best the players can do is avoid bumping into the stage sets.  If what happened at the Hawaii branch was one of those times, then Snowden was himself pointed to his chalk marks on the stage.
    
This said, and before I leave the topic of magic lamps, I think I can add to the lore on genies that the NSA Hawaii branch collected.  There are, according to the Quran, good genies and bad genies -- or jinn or djinn, as they're called in Arabic. But all the lore about genies, which predates the religion of the Mohammedans and even the Old Testament, agrees that they are very powerful. How, then, did genies get associated with a humble household lamp?  Why not a symbol of great worldly or supernatural power?
 
The answer is lost in the mists of prehistory, and Wikipedia is silent on the question. But we can always fall back on the little gray cells in the attempt to solve a mystery.  I'd guess genies are associated with a lamp because they are bringers of light.
 
The debate about whether Edward Snowden is a hero or traitor obscures the fact that his theft of NSA files was designed as a teaching mission.  Glenn Greenwald told Buzzfeed that the NSA files Snowden gave him were organized to an astonishing degree -- "almost scary."  Greenwald had been expecting to receive the kind of mess that Bradley Manning dumped on Wikileaks, which in turn dumped the mess on newspaper reporters, which after a passing attempt at organizing the huge of cache of files, dumped the hideous tangle of data on the public.
 
That is just why the incident blew over so quickly; the only people who could understand the implications of the massive dump of leaked files were hackers, and others who were very knowledgeable about highly technical IT matters. The public continued to remain in the dark.
 
It is actually Julian Assange, not Snowden, who sounded the alarm, as you can learn from the Wikipedia article about him. As early as 1998 he discovered patents that NSA was taking out, patents that spelled doom for human freedom.  Yet for all his technical skill with computers and intellectual brilliance, Assange couldn't communicate the implications of his discovery to the general public. Many others in the IT field also tried and failed. It would require the gifts of a teacher, an extraordinary teacher, one who could break down highly abstract concepts in such a way that all adults could understand, no matter what their level of knowledge about computer matters.

Snowden is just that teacher.  The way in which he presented the data was carefully designed to illustrate specific principles. And the stepwise sequence of leaks he arranged was in the manner of course work. This was so the journalists he chose to publish the NSA documents, and the general public, could absorb and understand the very complicated issues informing the technical aspects of NSA surveillance.
 
This doesn't mean he didn't copy data that could be very destructive to U.S. national security if released to the public.  The current estimate of defense officials is that the NSA data he copied only represent about 10 percent of the files at other defense agencies that he at least viewed if not copied. I wouldn't be surprised if he worked a kind of nuclear option into all the files he copied in case his teaching mission was cut short by his assassination or arrest. But his intent is clearly not to destroy; everything he's done is to bring light to where the darkness of great ignorance exists. In this he's been successful, and on a world scale.

And so when all is said and done, the NSA Hawaii branch office's blinkered belief in genies might be vindicated.  Maybe in the original meaning of the term Ed Snowden is indeed a genie, a real genie, a specially gifted teacher.

The NSA Department and the Stovepipe

Snowden maintains that his alerts and complaints were ignored by his superiors at NSA. Yet he also claims that the reactions of NSA employees he spoke to about his discoveries ranged from "greatly concerned" to "appalled" that NSA had very greatly exceeded its mandate.(3)

How could that be?  How could NSA employees be unaware of the extent of their own organization's surveillance?

The answer is that it's perfectly possible; indeed, it's standard practice in a large bureaucracy set up along military lines (or quasi-military lines) for only the top echelon to be aware in any detail of how the organization's many pieces fit together.
 
All such bureaucracies depend on something termed "stovepiping" of information gathered from within the organization; this in order to control knowledge of the big picture from within the organization.  From Wikipedia's discussion of a stovepipe organization:

A stovepipe organization is one where the structure of the organisation largely or entirely restricts the flow of information within the organisation to up-down through lines of control but inhibits or prevents cross organisational communication.

Another way to describe stovepiping is to say that it's an internalized form of guerrilla cell organization, where each cell is unaware of the activity of the other cells in the organization.  So it's very likely that the majority of NSA's employees were as surprised as the public about the big picture that Snowden's revelations painted.(4)

Stovepiping has many critics, as the Wikipedia article explains, and it contributes to the oligarchic aspect of bureaucratic organizations that Robert Michels decried in his dictum "Who says organization says oligarchy."  (See the Pundita post, The Devil and Departmentalization.)

The defenders of stovepiping argue that it's necessary for command and control in an organization, such as the military, which must keep many secrets. This argument goes out the window in an era when a bureaucracy such as NSA is opened up to hordes of outsiders.

From Ross Slutsky's The NSA’s Contractor Problem (VOA News blog, August 16, 2013):

[...]
In his book on the NSA, The Shadow Factory, intelligence journalist James Bamford claims that the size and scale of the NSA workforce exploded after 9/11.  “With the billions pouring in, [then-NSA director Michael Hayden] launched the largest recruiting drive in the agency’s history,” writes Bamford. “By 2008, 40 percent of the NSA’s workforce had been hired since 2001.” 
[...]
“At the same time Hayden was building his empire within Fort Meade, he was also creating a shadow NSA: of the $60 billion going to the intelligence community, most of it -- about $42 billion, an enormous 70 percent -- was going to outside contractors,” says Bamford.

James Bamford is not the only one to have made such claims about the size of the temp workforce in the U.S. intelligence community.  Angela Canterbury, Director of Public Policy, Project On Government Oversight, noted last year that there are "millions of contractors inside the nation's intelligence agencies," although to be precise she was also referring to subcontractors; i.e., employees of contracting firms.

And it's not only the IC that's overwhelmed by this tide of temp workers; the contracting firms, the ones that do high volume business with the U.S. government, haven't been able to keep up with vetting all the temps they employ.

Despite this, Congress and U.S. government and its advisers  -- and the intelligence agencies -- are playing ostrich.  I hesitated to quote from this November 7 Reuters report because its headliner claim (Exclusive: Snowden persuaded other NSA workers to give up passwords - sources) was disputed, not only by Ed Snowden but also by the NSA staffer who spoke to Andy Greenberg; indeed, a major reason the staffer risked being fired for speaking out was to dispute the claim.  However, there's much of interest in the report, especially this jaw dropper:

"In the classified world, there is a sharp distinction between insiders and outsiders. If you've been cleared and especially if you've been polygraphed, you're an insider and you are presumed to be trustworthy," said Steven Aftergood, a secrecy expert with the Federation of American Scientists. "What agencies are having a hard time grappling with is the insider threat, the idea that the guy in the next cubicle may not be reliable," he added.

With all respect to security experts at the federation they need to pay more attention to the present era.  Who has time to polygraph hordes of temps if nobody even has time to do adequate background checks?

There is no more 'insider outsider' distinction in U.S. government.  Yet there are enough people in government who want to believe there's still an "inside" that they go to lengths to keep up the pretense.
 
The situation provides a sound basis for the dispute that hactivists such as Julian Assange have with overweening attempts at secrecy in government.  The reasoning informing the attempts is outdated; it doesn't account for the fact that the rationale for cells, for stovepiping, collapses when the organization controlling the cells becomes a makeshift superhighway for outsiders.

Moreover, attempts to monitor traffic on the superhighway have led to over-classification of information as "secret" and to draconian nondisclosure agreements -- both of which discourage and also quash complaints from the people best positioned to warn about trouble in their department.

The outcome is that while the superhighway transports "inside" information about the organization to the "outside," stovepiping keeps many of employees in the dark about what's happening in their own organization!

1)  From the account provided to Andy Greenberg:

As further evidence that Snowden didn’t hijack his colleagues’ accounts for his leak, the NSA staffer points to an occasion when Snowden was given a manager’s password so that he could cover for him while he was on vacation. Even then, investigators found no evidence Snowden had misused that staffer’s privileges, and the source says nothing he could have uniquely accessed from the account has shown up in news reports.

The manager and the unnamed employee mentioned in the tale of the purloined password -- the February 10 NSA memo to a congressional oversight committee --  are the same person. As to how I can be sure of this, because if NSA could have scared up two employees who'd shared their password with Snowden, there would have been two sacrificial goats to haul to Capitol Hill, not one.

2) Security was so lax at NSA that it wouldn't be surprising if the agency had been hit repeatedly by industrial spies and even spies for foreign defense agencies. Snowden himself warned NSA that it was rife with security lapses that weren't being addressed, as the NSA staffer's account indicates.  As to the claim that security was tighter at NSA headquarters:  After Bradley Manning stole a huge cache of files the U.S. military instituted the "two-man rule" to ward against the unauthorized removal of computer files. Snowden claims that he recommended in 2009 that NSA institute the same rule, which is that two system administrators must be present when one accesses certain sensitive information. What's in the public record about Snowden's security warnings tends to support his claim. In any case NSA, its headquarters as well as branch offices, didn't even take this simple, nontechnical security measure until after Snowden struck.

3) From Wikipedia's article on Edward Snowden (see the webpage for links to the source notes): 

Using 'internal channels of dissent', Snowden said that he told multiple employees and two supervisors about his concerns. An NSA spokesperson responded, saying they had "not found any evidence to support Mr. Snowden's contention that he brought these matters to anyone's attention".(81)  Snowden elaborated in January 2014, saying "[I] made tremendous efforts to report these programs to co-workers, supervisors, and anyone with the proper clearance who would listen. The reactions of those I told about the scale of the constitutional violations ranged from deeply concerned to appalled, but no one was willing to risk their jobs, families, and possibly even freedom to go to through what [NSA whistleblower Thomas Drake] did." (79)

4)  Stovepiping might have been the key factor in Edward Snowden receiving an invisibility cloak from the next 'department' he worked for at NSA (Threat Operation Center, also at the Hawaii branch), after he switched employers from Dell to Booz Allen Hamilton.  While it's unlikely that a discussion of genie behavior would have figured in his performance review after he completed the special project, a free exchange of information about Snowden between the first and second departments would have raised a red flag for his new supervisors. No flag was raised:

"My position with Booz Allen Hamilton granted me access to lists of machines all over the world the NSA hacked," Snowden told the South China Morning Post, adding that this was exactly why he'd accepted it. He was one of around 1,000 NSA "sysadmins" allowed to look at many parts of this system. (Other users with top-secret clearance weren't allowed to see all classified files.) He could open a file without leaving an electronic trace. He was, in the words of one intelligence source, a "ghost user", able to haunt the agency's hallowed places.

This meant it wasn't possible for investigators to track which files he accessed or copied after he received the invisibility cloak!  This in turn means the outdated security software at the Hawaii branch wasn't the only factor in limiting the investigations.  It seems the only way the FBI and other investigators could hope to get an idea of what files he accessed while he wore the invisibility cloak was by reading the newspapers.

Report: "Staggering" levels of government corruption in EU countries

I'm posting a few excerpts from the following BBC report not to criticize European Union leaders but to remind that this is the era for countries to be tending their own fences. 
In 2005 Hurricane Katrina blew the lid off corruption in government administrations scattered in states throughout the U.S., including the state of Louisiana.  My stab at black humor at the time was that I was found under my desk, breathing into a paper bag and screaming, "Louisiana is a third world country and its foreign policy is run out of Quebec!") 
 
That was before the lid blew off what was happening in Michigan and specifically Detroit.

BBC, 3 February 2014:

The EU's Home Affairs Commissioner has warned of staggering levels of corruption in member countries.

Presenting the first EU-wide anti-corruption report, Cecilia Malmstrom said the problem eroded trust in democratic institutions and provided a breeding ground for organised crime.

She said the true cost of corruption was at least 120bn euros (£99bn) annually.

The BBC's Chris Morris reports. [...]

The Devil and Departmentalization

One day God and the Devil were debating each other when they spied a man discover a bit of truth.  They exulted in one voice, "Score for my side!"  God snapped, "How do you figure the point goes to you?"  "Because," replied the Devil smoothly, "I'm going to help him organize his discovery."

*******************
The Operation Was a Success But

The old joke about the Devil and organization harks to the Iron Law of Oligarchy, formulated in 1911 by a German sociologist named Robert Michels.  Simply stated the Iron Law is: "Who says organization says oligarchy."
 
The Iron Law has influenced generations of political thinkers and is considered the perennial bugaboo of large organizations, including government ones and dominant political parties. Oligarchy is seen as an inevitable byproduct of humans organizing themselves, with the few exceptions representing a unique set of circumstances. No type of government, even the most liberal democratic one, is considered immune from the operation of the Iron Law of Oligarchy.

I had cause to question the Iron Law after I read passages in Arvind Kejriwal's 2011 e-book Swaraj (Self Rule), available for free in PDF in both Hindi and English. The passages outline how, starting in the 1860s, the British Raj used a process of departmentalization to gain control of an ancient system of self-government in India's villages:

Earlier the villagers ran the establishment for irrigation, which the British started to control through an irrigation department.

The villagers earlier had the education establishment under their control.  Now the British formed an education department.

All areas of life and living were soon controlled by the British through one or other government department. ...

The passages illustrate that without a shot fired, and with no need for secret police and forced labor camps, it's possible through a process of departmentalization to rob a people of their ability to govern their affairs. 

Yet Kejriwal was wrong when he assumed the British Empire's departmentalization effort was specific to India. Once the British government's civil service went into high gear, starting in the mid-1850s, it did to its own populace what it later did to Indian villagers!  

However, departmentalizing villages in the homeland would be one thing. But because there are so many villages in India that only God has ever known exactly how many there are, the question would be the extent to which the British Empire had extended itself in India as the 19th Century drew to a close. At least as early as the 1890s it was clear the empire was greatly overextended. Another question, perhaps an unanswered one, would be the extent to which the civil service applied its departmentalization effort to lands the British controlled other than the homeland and India.     

What is known for certain is that Her Majesty's Civil Service survived with flying colors the collapse of the British Empire. An odd fact when one stops to think about it. Was this a case where the operation was a success but the patient died?  Had the British Empire departmentalized itself out of existence? 

With that thought in mind I decided to investigate whether the Iron Law of Oligarchy is as iron as it's cracked up to be.

The Iron Law of Oligarchy

Wikipedia's article on representative democracy, which the majority of the world's nations have adopted in one form or another, cites the criticism that this type of government inevitably devolves into a particracy or oligarchy because of the Iron Law of Oligarchy -- a particracy being "a de facto form of government where one or more political parties dominate the political process, rather than citizens and/or individual politicians."  (Wikipedia)

As to the Iron Law itself, it was first presented in Robert Michels' 1911 magnum opus, Political Parties: A Sociological Study of the Oligarchical Tendencies of Modern Democracy: 

Any large organization, Michels pointed out, has to create a bureaucracy in order to maintain its efficiency as it becomes larger. Many decisions have to be made daily that cannot be made by large numbers of disorganized people. 

For the organization to function effectively, centralization has to occur and power will end up in the hands of a few. Those few -- the oligarchy -- will use all means necessary to preserve and further increase their power. ... [Wikipedia]

Bureaumania

I found weak links in Michels' chain of reasoning.

1.  Michels over-applied the concept of bureaucracy, as have all those who apply the concept to the operational structure of any large organization.  Bureaucracy is specific to a government (or quasi-governmental organization such as the World Bank).  It literally means a rule of bureaus or 'desks' (or departments, as they're more commonly called today). 

The term was coined in the mid-1700s by Jacques Claude Marie Vincent de Gournay, a French economist and government official, as a sarcastic commentary on the craze in the French government for setting up bureaus to handle the burgeoning specialties represented by modern government administration. He also called the craze "bureaumania." 

The joke was on the economist, if John Stuart Mill was correct; he argued that bureaucracy is a type of government distinct from other types, including representative democracy, and that the most successful monarchies were actually bureaucracies.  If Mill is correct this could explain why no matter how different their politics and economic views, governments that administer through a bureaucracy tend to develop the same or remarkably similar problems. The most consistent feature of the problems isn't oligarchy. It's department heads acting with the zeal of a duke defending his dukedom to protect their department's turf and expand their budget allocations.

2. Even by the time he died, in 1936, Michels couldn't have imagined the number of specializations that would arise in the post-World War II era and reflect in the creation of a dizzying number of departments in government.

3.  Nor could he have imagined how the concept of the rule of law, when over-applied,  works out in practice over time in a representative democracy.  Once people are elected to legislate and are paid to do so -- once it's their job -- they can't be expected to play badminton when they convene.  They will write as much legislation as they possibly can, which must be administered by one or more departments in government. This generally leads to the creation of a new department(s) or expansion of existing ones.

The Iron Law of Departmentalization

If Michels could have imagined unchecked specialization in government and legislation, I venture he would have noticed that galloping departmentalization is the result, and all that goes with it:

1.  Pretty soon the myriad departments are fiercely protecting their mandates and budget allocations.

2.  This puts them in conflict with myriad other departments doing the same.

3.  This leads to departments working at cross-purposes and the weaponization of information; i.e., 'information capture' or extreme compartmentalization of information. (What has also been called stovepiping or silo-ing of information.) When this happens the people at the top and even those in key departments might have no knowledge of vital information held by other department(s). 

4.  The volume of data generated by a large number of departments means that key information can easily be overlooked by decision makers. And when combined with compartmentalization of specializations across numerous departments, key information can be misunderstood or not even recognized as key by decision makers.   

The upshot isn't oligarchy, which presumes a reasonably united front among a few people; it's chaos.

(This might have been the Devil's plan all along).

Thusly, when the number of departments in a government reaches the magic number, the juggernaut of departmentalization crushes everything in its path, including the Iron Law of Oligarchy. 

Now what is the magic number?  From my back of the envelope calculations it's the number at which everyone gives up trying to make an accurate count of the number of departments.
 
(Departments would include agencies, commissions, services, etc., as well as departments within a department no matter how they're named; e.g., division, section, etc.)
 
From all this I'd say there's an Iron Law of Departmentalization, which simply stated is that chaos cancels out oligarchy when departments proliferate like rabbits.

Here American readers might want to know whether the U.S. government has reached the magic number yet. From these two articles about bureaucracy in the U.S. government, the answer is yes. 

Grand Illusion

But how could generations of political thinkers have overlooked the Iron Law of Departmentalization?  To put the question another way, how can a government administration continue functioning if it's in chaos?  The answer is that it can't, not without factors that offset or mitigate chaos in the decision-making processes.  Here are three factors that apply to the USA:

1.  The introduction of 'czars' to government administration.  In the USA a czar is appointed by the U.S. President and answerable only to the President, so he can override chaos at the Cabinet level of departments and lower on the bureaucratic food chain. 
  
2.  A de facto plutocracy.  While the rich can be in disagreement with each other on many issues, they're staunchly united around the goal of remaining rich. This gives their decisions as a bloc great coherence.  And as a bloc the rich have the power to greatly influence many types of government decisions. This helps mask chaos at the operational level of government.    
 
3.  This factor would only apply to a few governments in history.  It's when a nation or empire's currency is the dominant one used in international trade.  This currency hegemony allows a government a virtually unlimited line of credit -- or the ability to kite checks, in a manner of speaking, without penalty. This allows the government to evade the full consequences for bad decisions, including those arising from chaos at the government's operational level. 

From the post-World War II period onward, the U.S. dollar's status as the world's major reserve currency has in effect provided the U.S. government with an unlimited line of credit.  This has repeatedly let administrations off the hook when chaos at the operational level has led to consequences that would destabilize if not crash any other government.
 
Yet the most problematical aspect of a government relying on its currency for bailouts is that this shields decision-makers in the government from the full consequences of any bad decisions.  This interferes with the famous feedback loop by which humans increase their intelligence, which is also known as learning from mistakes.  One doesn't have to learn from mistakes if there's always a safety net with a soft cushion underneath.  In government this translates to people not being fired or demoted even for catastrophically bad decisions.
  
The Devil is in the Detail

So if the Devil does not actually reside in the human tendency to get organized, where does he reside when it comes to government?
  
One of Michels' professors was the German sociologist Max Weber, whose prolific writings on bureaucracy helped establish public administration as a field of study distinct from political science. Weber believed that bureaucracy was the only efficient means for modern governments to organize themselves, but he was very wary of bureaucratic administration. He saw it as trapping individuality in an "iron cage" of rules-based or 'by the book' decision making.

I've not made a study of Weber's works so I don't want to short his research and conclusions.  But from what I know of his writings I don't think he paid much attention to nonprofessional government.  I'd say it was the same for Robert Michels.  Weber was analyzing paid professional government administration.  In fact, he wasn't so much studying government administration as the career of government administration. 
Weber's neglect of nonprofessional systems of government, if it was neglect, would be understandable.  Even if he'd wanted to study examples of nonprofessional government he was limited by his era's sketchy histories of governments that predated written historical records.  

As for the early American experience with governing, which was in the do it yourself mode -- while Weber surely had some knowledge of that, the American experience couldn't be applied to Europe, where his attention was focused.  Weber, as with Michels and many other European political thinkers of the day, was trying to find ways to democratize government administration in a region of the world that for thousands of years had only known one form or another of authoritarian rule and professional government administration.

This said, those millennia are a drop in the bucket next to the ages when government was a do it yourself affair.  For most of humanity's history governing wasn't a profession. It was an unpaid activity -- and a costly activity in some respects, in that people had to take time away from the means by which they supported themselves to participate in governing. (I think it's just because of this cost that decisions in nonprofessional governing are oriented to solving a problem rather than making a career out of it.)

Nonprofessional governing does generate organizations and also hierarchies, but to say that an oligarchy inevitably derives from these is to distort the concept of oligarchy.

To boil it down, there is no such thing as a volunteer bureaucrat.  Those who swear by the Iron Law of Oligarchy are overlooking this detail.

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Edward Snowden and the Fellowship of the Light vs Tyranny

Today in a speech President Barack Obama took first steps to smash the web of deceit that has characterized the surveillance state gone berserk. The stark warning, only implied in his words, is that freedom is very costly. A good man, a good citizen, had to become a fugitive and be prepared to live the rest of his life like a hunted animal in order to throw light on horrific actions by the state. Those few who rose to help him at the beginning had to face the same prospect.

The greatest irony is that many wanted to put Edward Snowden on trial.  It was always they who were on trial.

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Why AI has a long way to go and totalitarianism is never total

Early in his film career Matthew Broderick got the actor's opportunity of a lifetime. He was cast in a movie with Marlon Brando and even had a scene in the film in which he would be exchanging lines with the great Brando. Broderick was so nervous when the time came to shoot the scene that the director felt compelled to give him a pep talk. He told him to gather his wits because Brando had a tendency to improvise his lines; he needed to be ready to improvise replies if the script didn't fit with what Brando said to him.

Came the momentous moment. With the camera rolling, Brando leaned toward Broderick, looked him straight in the eye, and said, "I can't understand a word you're saying. Are you eating a tuna fish sandwich?"

For the life of him Broderick couldn't think how to improvise a reply to what was gibberish to begin with, and which bore no relation to the script, story line, or Brando's character or his.

Only a very seasoned actor such as Dustin Hoffman, who told the Brando story on the Charlie Rose show earlier this year, would have had the wits and nerve to land a swing. Broderick wasn't seasoned or nervy. He was tongue tied. Then the pitcher took pity and threw the curve ball again:  Brando continued looking at him and slowly repeated: "I can't understand a word you're saying. Are you eating a tuna fish sandwich?"

Broderick couldn't even try to take a swing because he'd frozen.

Cut! Cut!

After the camera shut off Brando went to find the technician. It turned out that even though he was looking at Broderick while he spoke, Brando was talking to a technician offstage who was supposed to read Brando his lines, which Brando picked up through a hidden microphone in his ear. (Brando famously hated memorizing lines.) But the technician was chewing while he was reading the line meant for Broderick. Brando, knowing the technician's favorite lunch food, asked if he was eating a tuna fish sandwich.

Now there are many ways of looking at this story. Maybe it was Brando's way of telling the technician, 'Don't mind us, it's only costing the company $10,000 a minute while you chew in my ear.'

But I would file the story under "Saving Grace." I figure we can count on one thing in this uncertain world.  When it comes time to activate the Final Hour there will be some fool at the controls taking an unauthorized lunch break. World without end.

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When charitable money talks nobody walks

"The United States ranks No. 1 in the Charities Aid Foundation's most recent World Giving Index, with proportionally more Americans giving than the population of any other country.  [Cardinal] Dolan said that the pope has expressed gratitude for American philanthropy."

Regarding this passage in yesterday's post (God and Caesar and Americans) that pertained to supposedly anti-capitalist or pro-socialist comments made by Pope Francis:

"I haven't studied any of Pope Francis' statements but if he's lost the thread of Jesus' teachings, it would be necessary for Catholic religious scholars and the order of the religious preceptors he leads to point this out to him; if not, he should be prepared to defend his interpretations of the teachings."

This brought forth a comment that the Pope had indeed made specific remarks about economics that were clearly anti-capitalist and which specifically related to the 'trickle down' economic theory, and that this was what the uproar was about in the media.

Well these things have a way of ironing themselves out, particularly when seven figure donations to the Archdiocese of New York are involved. Hours after I published the post CNBC published the following report. It turns out that much of the Pope's criticism of the rich is simply a misunderstanding, and that once again in recent days a translator is in trouble. To repeat myself: if the Pope has lost the thread, it would be up to religious scholars and the order of the religious preceptors he leads to point this out to him.

Before I turn over the floor to Michelle Caruso-Cabrera, another comment about yesterday's post was that "Some would argue this was God's work." The commenter didn't elaborate, but if the reference is to my remarks about Christianity's rise: to say it's God plan -- it's only human to want to know some of the operational details of the plan. That is the great contribution of the PBS series on the early Christians that I highlighted in yesterday's post.
Pope's sharp words make a wealthy donor hesitate
Published: Monday, 30 Dec 2013 - 7:07 PM ET
By: Michelle Caruso-Cabrera, CNBC Chief International Correspondent

CNBC's Michelle Caruso-Cabrera talks to Cardinal Timothy Dolan about concerns following the pope's recent comments.

Pope Francis' critical comments about the wealthy and capitalism have at least one wealthy capitalist benefactor hesitant about giving financial support to one of the church's major fundraising projects.

At issue is an effort to raise $180 million for the restoration of St. Patrick's Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things.
Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as "exclusionary," urging the rich to give more to the poor and criticizing a "culture of prosperity" that leads some to become "incapable of feeling compassion for the poor."

Langone said he's raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress.

"I've told the cardinal, 'Your Eminence, this is one more hurdle I hope we don't have to deal with. You want to be careful about generalities. Rich people in one country don't act the same as rich people in another country,' " he said.

Some of the statements in question are from Francis' first teaching, or "exhortation," a 224-page document issued in late November. In it, the pontiff criticizes what he calls "an economy of exclusion and inequality," blaming ideologies that "defend the absolute autonomy of the marketplace and financial speculation."

Dolan told CNBC that he had heard from Langone and said, " 'Well, Ken, that would be a misunderstanding of the Holy Father's message. The pope loves poor people. He also loves rich people.' ... So I said, 'Ken, thanks for bringing it to my attention. We've gotta correct to make sure this gentleman understands the Holy Father's message properly.' And then I think he's gonna say, 'Oh, OK. If that's the case, count me in for St. Patrick's Cathedral.' "

Neither Langone or Dolan revealed the name of the potential donor. The cardinal said he didn't know the person's identity, and Langone declined to name him, saying only that the individual was upset about the pope's comments about the rich being insensitive to the poor.

In a speech in Brazil in July, Francis appealed "to those in possession of greater resources," saying that they should "never tire of working for a more just world, marked by greater solidarity. No one can remain insensitive to the inequalities that persist in the world."

It was unclear when Dolan may speak with the individual donor.

Langone, who describes himself as a devout Catholic who prays every morning, said he has told the cardinal that "you get more with honey than with vinegar." He said he also wants to make clear that wealthy Americans are some of the biggest donors in the world.

"There is no nation on earth that is so forthcoming, so giving," he said, adding that he hopes the pope can "celebrate a positive point of view rather than focusing on the negative."

The United States ranks No. 1 in the Charities Aid Foundation's most recent World Giving Index, with proportionally more Americans giving than the population of any other country.

Dolan said that the pope has expressed gratitude for American philanthropy.

"In the one long sit-down that I had with him, the Holy Father told me that he has a lot of gratitude for the generosity of the Catholic Church in the United States. He's aware of our help to the missions, to the poor of the world, to international development, to peace and ... justice," he said. "So, I know that he's very grateful for the ... legendary generosity of the Catholic Church in the United States."

Langone said he is also on a campaign to explain "the vast difference between the pope's experience in Argentina and how we are in America."

Francis is from Argentina, a country that suffered tremendous economic upheaval in early 2001 in what was then the largest sovereign default in history. Poverty rates skyrocketed overnight when the country refused assistance from the International Monetary Fund.

Arthur Brooks, head of the American Enterprise Institute, a think tank that promotes free markets, said he agrees that the pope's beliefs are likely informed by his Argentine heritage.

"In places like Argentina, what they call free enterprise is a combination of socialism and crony capitalism," he said.

Brooks, also a practicing Catholic who has read the pope's exhortation in its original Spanish, said that "taken as a whole, the exhortation is good and right and beautiful. But it's limited in its understanding of economics from the American context."

He noted that Francis "is not an economist and not an American."

END REPORT

God and Caesar and Americans

"Render unto Caesar the things that are Caesar's, and unto God the things that are God's."
-- Jesus Christ

Last year around this time I watched the final two episodes of a groundbreaking six-part series made for PBS (U.S. public broadcast television) titled God in America, first aired in October 2010. A co-production of FRONTLINE -- famous for its investigative reports -- and the PBS American history show, "American Experience," the production combines "documentary footage, historical dramatization, and interviews with religious historians" to trace the impact of religion on American public life over a period of four centuries -- from the days of the Puritans to the 2008 presidential campaign.

Even though the episodes I saw ("Soul of a Nation" and "Of God and Caesar") deal with events in my lifetime, I was surprised by how much I learned from them. What rose to the top for me was that for a segment of American Christians it was their interpretation of Jesus' teachings, not socialism or an antiwar political agenda, which informed their backlash against socially conservative American Christians who'd been drawn into politics during the Reagan era. Yet the theological basis for their argument with these newly politicized Christian conservatives wasn't evident from the daily news and policy debates in Congress. Instead, the debate was cast by the media as Liberal Democrats vs. right-wing Christians.

After seeing the two episodes of God in America I realized there was a simple explanation for this: modern America's obsessively secular public life suppressed disputes among Americans that are based in theology. While a political Liberal could cite his faith for support of say, civil rights legislation and a political Conservative could cite the same for his opposition to abortion, it was off limits in the public forum to dispute or even question the theological assumptions informing the political stances.

One result is that much of what is actually in the province of religion was loaded onto politics. This greatly overburdened and distorted the American political system with issues that are best hashed out in theological debates. Yet these debates can't take place in American public forums so as not to offend any American's religious sensibilities!

Another result is that the White House has been put in an ungainly position, in the manner of Caesars sermonizing on the fine points of Christian doctrine to explain a tax. (This might help explain why the last U.S. President who wasn't called a hypocrite by a great many Americans was Truman.)

The story of the Roman emperor Constantine, who probably persecuted more Christians than all his pagan predecessors combined while imposing on Roman subjects his idea of proper Christianity, is ample evidence that the state should stay out of religious matters. I venture this was one of Jesus' points when he said to render unto God that which is God's.

Can the situation get any more ironic? On the one hand Americans won't debate religion with each other in the public forum; on the other hand they never tire of saying that there must be a division between church and state. But once religious matters are placed on the shoulders of the state, there is no way to maintain a separation of church and state -- much less a separation of church and taxation.

And so the rationale for suppressing theological disagreements in American public forums -- to ward against intolerance -- has in practice imbued American politics with such intolerance that today, as pollsters and media pundits never tire of telling us, the United States is a bitterly divided nation!

What is the solution to this problem? A part of the solution is education -- a point made by Stephen Prothero, professor of religion at Boston University, author of Religious Literacy: What Every American Needs to Know -- And Doesn’t, and chief editorial consultant for the God in America series:

Americans are awash in a sea of faith, but their knowledge about religious faiths and religious history often runs as shallow as their commitment to religion runs deep. A series like God in America can help correct that imbalance and provide the basis for a common understanding of the role religion has played in American public life.

Of course Americans are not the only peoples whose knowledge of their nation's religious history is sparse. We could all do with a great deal more education in that regard. However, learning about a religion is not the same as debating about it. Even for the experts, debating theological matters is sort of like bouncing around at the end of a slender branch above a pit of quicksand. And so historically Americans have intelligently left this perilous exercise mostly to scholars and religious leaders.

Yet in this era of hyperlinked online encyclopedias, a reasonably intelligent and literate layperson can with determination cram in a matter of hours on a subject that earlier would have taken divinity students months if not years of mucking around with the Dewey Decimal System to learn well enough to debate. So it's now within reach of many to have their cake and eat it too: stay within the bounds of religious tolerance while questioning interpretations of religious doctrine.

This said, how much religious literacy does it require to spot a lopsided argument and debate it on that level? Take, for instance, the criticism leveled by an evangelical Christian who reviewed a PBS series on the early Christians. "Beware," cautioned the reviewer, of the "seductive but dangerously inaccurate" film series

... The series was developed by a producer who appears to enjoy using his position to promote left-wing, liberal beliefs. ... It is worthy of note that no evangelical scholars were used in the series. Rather, the emphasis was on people from such liberal institutions as Harvard, Yale, Princeton, Duke, Brown, Union, etc. ...

Let me see if I understand this correctly: is the reviewer implying that Christian evangelical scholarship equates with politics?

Yet this kind of lopsided argument is reaching troubling proportions in the United States. I'm not going to dig up links but one doesn't have to look far on a search engine to find discussions that either approvingly or disapprovingly tag Pope Francis as a socialist or anti-capitalist. Yet what does this have to do with Catholic theology?

I haven't studied any of Pope Francis' statements but if he's lost the thread of Jesus' teachings, it would be necessary for Catholic religious scholars and the order of the religious preceptors he leads to point this out to him; if not, he should be prepared to defend his interpretations of the teachings. What a Pope shouldn't have to do is answer lopsided arguments in kind.

There is another term for lopsided argument; it's called pseudo logic. But that's why God invented the syllogism. Pseudo logic depends on getting the hearer to accept contradictory or specious statements. It is child's play for anyone with a reasonable mastery of syllogistic reasoning to point out the contradictions or their inappropriateness to the discussion at hand. Oh but wait I forgot! American public education doesn't teach children syllogistic reasoning.

That, I submit, is the larger part of the problem, and the solution, of Caesar playing God in America.

For those who would say that religion has always been politicized: there is no way to read politics into the teachings of Siddhartha Gautama -- the Buddha -- or Jesus. Both men established paths to liberation from existential suffering: in the case of Siddhartha, a path of pure technique; in the case of Jesus a devotional path based on faith in the compassionate aspect of God.

While they were working from different metaphysics and thus had different concepts of hell, both teachers saw existential suffering as impossible to avoid by trying to make the furniture in hell more comfy. Because of this, neither teacher saw an improved social order or better government as the means to liberation from a situation they considered hellish.

Jesus, to make sure there was no misunderstanding on this point, told Pontius Pilate, the Governor of Judea, "My kingdom is not of this world."

That the paths created by Siddhartha and Jesus did become politicized after many people adopted those paths, that the body of doctrines that sprouted along the paths became state-backed religions, is not saying that the paths are political. It's saying only that human nature and the governments it evolves are political. So to argue that religion has always been politicized -- it depends on what is meant by religion.

Finally, last December I also watched the entire PBS series that the Christian reviewer criticized. The reviewer didn't mention that the work of the scholars to reconstruct the history of the early Christians was admittedly speculative in parts. The speculation takes nothing away from their historic collaboration for public television and its importance. As with God in America, the series is an important contribution to an understanding of Christianity's impact on history, although it's no more free of controversy than the New Testament itself.

The four-hour series, produced by FRONTLINE, first aired in April 1998 and is titled From Jesus to Christ: The Early Christians.

The series was created in the attempt to explain how a small, renegade Jewish sect in the far reaches of the Roman Empire came to rule the empire in what was the most unlikely triumph of ideas in history. The four hours fly by as historians, archeologists, and Biblical scholars -- 12 in all -- and FRONTLINE's investigative reporting-oriented production team working with video of the lands of Judaism and models and paintings of ancient Rome, barrel into the journey of Jesus' teachings from Judea to Rome. After a very short teaching mission Jesus left his disciples to stumble forward with his teachings. What one learns from Jesus to Christ is that they stumbled well.

The series can be viewed for free in its entirety on the PBS website, as can the God in America series. No matter what your religious faith or lack thereof, I think you owe it to yourself to watch both productions if you want a basic understanding of how Christianity arose from the teachings of Jesus, and how the religion influenced the United States of America. Of course both series should be considered a starting point, not the final word on either topic.

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What comes around goes around: Collectivism: deeply embedded in American economic development backed by government

Those who read the 'Tofu and Police State' post know I went to some effort to clearly distinguish my use of the term "economic collectivism" from the general understanding of collectivism and its best known historical usage. If the effort seems like overkill I'll ask you to read Collectivism: Deeply Embedded In "Economic Development" by Cheryl Pass at Freedom Outpost, published in September 2012.

It's very easy to mistake the kind of economic collectivism I'm talking about for the topic of the essay, even though the topic is important and also significant to my own discussion. Here's an excerpt from essay. See the website for the photograph of the dilapidated Firestone /Loray Mill:

[...] Our taxes are committed to saving the Firestone / Loray Mill, whether we wanted to or not. If this were just one instance, it might be viewed as an anomaly, but it isn't. Every town in America now has an "Economic Development" office that is a quasi-government agency combined with private sector interests. Our city and county have committed our taxes to many of these "Economic Development" schemes. We have bought land and given it away. We have spent money on site preparation. We have forgiven taxes. We have given utility credits. We have guaranteed loans.

In short, we in the private sector are forced to prop up certain chosen business ventures collectively. Just like Solyndra at the Federal level, this situation is occurring every day all over the country.

We are on the hook. All of us. While we get poorer, the chosen few run away laughing all the way to the bank. Our bank. Taking our money. And politicians just keep doing this, over and over again at all levels of government. I can label this as Fascism or Communism. Either way, it isn't the American way of life as I know it is supposed to be. It is tragic, frankly.

So how collectivist are we today? Deeply embedded. Somehow government has given itself permission to steal from all, to favor the few. Who are these people? They have convinced themselves collectivism is O.K., as long as it is for "Economic Development."
[...]

I hope you'll read the entire essay; I found it very moving because she's just trying to explain what happened to her, to her town. I came across the essay while I was mining the internet in search of the general understanding of the term "collectivism."

But I'll tell you my first reaction to Cheryl's story. It was the same reaction I had to the news that ordinary working Cypriots, suddenly and with no warning, found their savings deposits had been frozen by their government at the direction of the Troika, which includes the International Monetary Fund.

I blurted, "How does it feel?"

You see, what was done to Cheryl Pass and the other sensible people in her town, what was done to the Cypriots, is simply the kind of one size fits all prescription that has long been inflicted by the World Bank and the International Monetary Fund on the world's downtrodden in the name of economic development. So what Cheryl talked about is also what's known as the chickens come home to roost.

Americans and West Europeans helped fund the World Bank and IMF for generations, yet what happened to the funding, how it was it used, didn't affect the funders because the economic prescriptions weren't applied to their own countries. They were applied to 'underdeveloped' countries. Then, a historic recession happened, one that converged with a vastly changed world. So now Americans and West Europeans must be treated as if they're underdeveloped peoples in order to save their economies.

Yes of course it was always done with the best of intentions, but you know what they say about the road to Hell. So when Cheryl observes that the situation she described isn't the American Way as she knows it, she's inadvertently speaking the literal truth. Actually it is the American Way, it's been the American Way for more than a half century; it's just that until recently few Americans were aware of exactly what that way entails -- not until it was imposed on them.

However, I too am an American, born and raised, so in March I didn't engage in schadenfreude after I listened to Zen Master Larry Summers convey the bottom line for Americans in the wake of the Troika's Cypriot Solution.

But walking back from where we are now will require Americans understanding the kind of thinking that's supported the reign of economists since the Great Depression and the Mandarins of the Future, as author Nils Gilman termed the U.S. government's economic initiative to save Third World peoples from the Soviet threat by modernizing them.

To return to Cheryl Pass, in one respect I think she's wrong. As I've pointed out in the 'Economic Collective' posts, the thinking that supports the economic developers isn't communist or fascist even though it can inform both types of government. It can inform any type of political or economic stance because it's rooted in over-application of statistical reasoning.

And so in my view the great irony is that the self-termed capitalists who've backed indiscriminate applications of modernization theory have done more to give capitalism a bad name than all the communists combined. Before these people are capitalist they are economic collectivists. Yet because they can't think outside the paradigm they don't get it, even when you shout in the effort to explain that the economy doesn't actually exist, any more than the statistical person exists, except as a concept.

Because they can't be shaken from their spell, they can't see the difference between a cause and an effect. To explain the import of this mental blindness:

1. Economics is called a science, a social science. Science asks, 'How did X phenomenon occur?'

2. Once scientific observations about the economic behavior of groups is applied; i.e., used with the intention to create a desired economic effect, this risks confusing observed effects with a path for achieving desired effects.

3. Once the risk is institutionalized at the level of government and backed by the guns of the state, then is when you can see horrors. Real horrors. Not conceptual ones.

As to whether there's any way to stop the madness -- I would guess that there has to be a revolution in economics, which became reliant, obsessively so, on mathematics during the post World War Two era. The Austrian School doesn't rely so much on math, but the mainstream economists do, unless you want to argue they've all been co-opted by the Keynesians, who do rely on math.

Beyond that, governments need to be pried from their obsession with acting Scientifical -- before they Scientificalize humanity back to the Dark Ages.

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Squeak and Awe

May 3, 2013

MICHAEL WRIGHT: What's this about the European Central Bank charging a negative interest rate on bank deposits?

PUNDITA: Squeak and Awe.

MICHAEL: [laughing] Squeak and Awe?

PUNDITA: That was the snap analysis from a British reporter for CNBC. God bless British wit. It turned out he nailed it; the next day someone from the European Central Bank said that the talk about a negative interest rate at the Bratislava conference was just tossing around ideas, thinking aloud.

MICHAEL: Thinking aloud in front of a public microphone. The euro fell against the dollar on [ECB President Mario Draghi's] talk about a negative interest rate.

PUNDITA: It rebounded once currency traders deciphered Draghi's statements.

MICHAEL: What was his point? Was it a shot across the Federal Reserve's bow? Are we looking at a currency war?

PUNDITA: There are two different types of interest rates in play here. The ECB did make another cut in the interest it charges banks to borrow money from it. Maybe this cut was in part a reaction to the Fed's continued quantitative easing. But Draghi's talk about a negative interest rate relates to the interest the European Union's central bank pays to Eurozone banks that stash a big chunk of their money at the ECB. The interest the ECB currently pays is already at zero percent.

The zero rate is due to pressure on the central bank from Eurozone governments. They don't want the ECB encouraging Eurozone banks to sit on mountains of money; they want them lending the money to businesses to help kickstart the Eurozone economies. This is on the theory that with rapid business expansion will come rapid hiring of many people. This on the theory that with more people employed they'll spend more on making purchases, which will fatten the starving revenues from the Value Added Tax.

MICHAEL: I know there's high unemployment across the Eurozone.

PUNDITA: Yes. It's about 17 percent, and in some Eurozone nations it's much higher than the overall figure. If I recall the unemployment rate in Spain is around 50 percent. So the governments want these unemployed people off the dole and into stores to buy stuff.

All this depends on making the banking system the tip of the spear in EU recession-era fiscal policy. The position of Europe's bankers is, 'Hey! We're not employment agencies.' So their response to the zero interest rate has been to stick their fingers in their ears and chant, 'Lalalalalala we're not listening.'

Draghi's rumination in front of an open mike about a negative interest rate, which works out to a penalty fee, was his way of saying 'Read my lips.'

To show how shocked and awed Europe's bankers were by the threat, another idea to come from the Bratislava confab is that the ECB will directly extend credit to small and medium-size businesses. This is an acknowledgment that if a zero interest rate doesn't scare bankers into putting on a suicide vest, a penalty fee on top of that isn't going to turn them into martyrs either.

However, there are actually a few teeth in Draghi's Squeak and Awe moment. The ECB is saying to the bankers, 'If you won't lend to the little guy, we'll lend out the money you stashed with us. This means we'll collect the interest on the loans, not you. On top of this we just might charge you a fee for lending out your stash.'

MICHAEL: Where are the teeth in this?

PUNDITA: The implication is if the European Union's central bank has to act like a neighborhood lender, what does it need neighborhood banks for? The real threat is always the unspoken one.

MICHAEL: What's the real threat? That they'll nationalize all the banks?

PUNDITA: Many of Europe's banks are already nationalized, or at least partly supported by taxpayers. But these nationalizations are local to each sovereign government in the Eurozone. The real threat, the unspoken one, is that the banking system of each Eurozone country will be put under the control of the European Parliament, with the monetary policy for the entire Eurozone controlled by just one central bank -- the ECB.

MICHAEL: Rahm Emanuel's dictum. Never let a crisis go to waste. Is the fear that they're using the banking system as a backdoor way to force Eurozone nations into a United States of Europe?

PUNDITA: Well if there are sovereign governments that're afraid of this, it's a little late in the day for the fear to manifest. If the friendly neighborhood heroin dealer is handing out free samples, people should realize this isn't going to work out to their benefit. In the same manner, the GIPS governments got into the habit of turning to the ECB for cheap loans after they spent themselves into an impossible load of debt. So they should have seen the Cyprus solution coming a mile away. The solution being that when a government claims it has no collateral whatsoever to put up for another loan, the ECB asks, 'What about the pension funds?'

However, that's the view of EU Skeptics and those who believe in Them. Them being a SMERSH-like organization of fabulously wealthy evil geniuses who're plotting to take over the world. The other side of the story is Benjamin Franklin's advice to American revolutionaries during the war against the British crown: If we don't hang together we'll surely hang separately. Even many Europeans who hate the ECB and the EU Commission support a united Europe on that very same argument. It's just that forging sovereign nations into a single nation is a messy and unpleasant process -- one that can crash governments and lead to much violence.

MICHAEL: I'm with the bankers on this one. European business can't expand into weak consumer demand. It's the same problem we have in the U.S.

PUNDITA: Apple computer's bond offering is to buy up more of their stock, supposedly ahead of returning a big chunk of the cash they're sitting on to their shareholders. That's great for shareholders and especially for funds that have a large position in Apple shares. But this is Apple's way of saying that they're not going to throw their mountain of cash into business expansion because there's not enough consumer demand to expand into, not anywhere on the horizon. Same problem in Europe. Same in China. Same everywhere. And what consumer demand exists is in exports, which run into the stiff headwind of protectionism and the locals doing their own versions of the imported good and services.

MICHAEL: Isn't the Federal Reserve's quantitative easing supposed to solve the problems of slow business growth and weak consumer demand?

PUNDITA: No. It's to export U.S. debt and flush scared money out of bank deposits and into the investment markets and from there into purchases of big-ticket consumer goods and houses. QE is an effort to appease the Ghost of 1929.

MICHAEL: It looks to me as if all it's done is set up currency wars between central banks. Every major central bank is slashing the interest it charges to lend to its banks. What's this doing, besides cheapening every nation's currency? QE isn't encouraging business expansion. It's not putting people back to work. The better than expected [U.S.] job figures released today are a joke when you drill down into the numbers. The spike in the stock market today was just relief that the unemployment figure was not as bad as everyone feared.

All I'm seeing is, you cut your interest rate by so many points, I'll cut mine. Where's this leading? You talk about the Ghost of 1929. Maybe governments are so focused on the ghost they're not seeing the Ghost of 1939 gaining on them.

PUNDITA: Well, I don't think we have immediate worries on that score, not unless Europe and Asia can materialize big blue water navies out of thin air. The problem with doing this is that a big blue water navy costs big money, and it so happens that quantitative easing is meant to flood the banking system with cheap money, not the 'real' economy -- the one that builds blue water navies.

If you want to build a real ship you have to do it with real raw materials that are mined and shipped by companies which have employees who can't pay their bills with quantitative easing. They want to be paid in real money.

MICHAEL: The companies also want to be paid in real money. They aren't going to take on big debt to build those ships; not on the deal that if they build the ships government promises to raise enough in taxes during a recession to buy them.

PUNDITA: Right! [laughing] There's a certain circularity in this situation. The Federal Reserve doesn't actually print money to finance government debt. It creates money -- actually, "near money" -- when it buys government bonds. It does this when the amount of the purchase is recorded in electronic ciphers. Bing! So many more millions of dollars appear on the computer screen.

The Fed does the same thing every time it lends to banks within the Fed's banking system. Same happens when the banks lend money to each other to keep their rate of lending in line with fractional reserve banking regulations. Each loan and repayment creates more near money, which expands the money supply within the banking system. But at the very end of this process of near money creation is a person who can't take the Federal Reserve with him every time he wants to buy school clothes for his kids.

MICHAEL: The individual is expected to act like a government only up until the point where he can't pay his bills.

PUNDITA: That's it. He can't take the pile of school clothes to the checkout counter at Target and tell the clerk, 'Let's do our part to prevent another Great Depression. I don't have the money to pay you. But for the sake of liquidity, you take my handshake as assurance that if you simply ring up the amount of this merchandise and I walk out of the store with it, you'll be keeping the velocity of money going.'

MICHAEL: The clerk will call for the security guards. But nobody's going to put the Fed in jail for shoplifting.

PUNDITA: Yes, well, it's not considered shoplifting when governments and a nation's central banks do it. Any rate, I don't see another world war looming. Right now the Ghost of 1929 rules -- fear of the ghost.

The Ghost

As to a currency war, maybe the ECB's latest bout of QE was partly in reaction to the Fed's May Day announcement that their cheap cost of lending to US banks will get even cheaper or maybe it will get expensive, circumstances warranting.

Now what would these circumstances be? In March, Ben Bernanke pulled a magic number of the air: QE would ease up if the U.S. unemployment number fell below 6.5 percent -- or 6.6 percent; I don't recall -- and stayed below that number for a few months. On May Day -- two days before the latest jobs number was released to the public -- the wording of the announcement was a little different. It boiled down to saying that QE will increase or decrease depending on circumstances that only The Shadow knows.

So until The Shadow speaks, the Fed will continue to pump 85 billion dollars every month into the U.S. banking system. And if other central banks have to keep up by continuing to slash the interest they charge to lend to their own banks, that's their problem. India's central bank is already complaining that it's cut the lending rate so many times it's running out of room to cut.

MICHAEL: This is insanity.

PUNDITA: It's antiquated monetary and economic theories running headlong into the era of mega populations, mega global trade, and floating currency exchange rates. A standard economic theory is that it's possible for a nation to export its way out of a recession. On paper that works, but only when it's just one country or one small world region that's creating the flood of exports and driving down the cost of its currency to make its exports very attractive to foreign buyers. The theory falls apart when currencies float against each other in worth, as they have since 1973, and when much of the world is trying to export its way out of recession, as it is now.

The upshot is not so much a currency war as a chain reaction.

MICHAEL: If they can see this, if they know these old policies don't work today, why do they keep using them?

PUNDITA: Why did high priests keep throwing virgins off a cliff when it was obvious that this was no longer producing a bumper harvest? I once wrote an essay for my blog on this topic. The answer is, 'How do you know that if you stop throwing virgins off a cliff, this won't make the weather gods even angrier?'

Same argument applies when it comes to defending fiscal and monetary policies that were originally designed to ward off a replay of the Great Depression. Have we had another collapse of the banking system since the 1930s? No. If you tell them, 'Yeah but we had a collapse of the shadow banking system in 2007,' they'll tell you, 'That's not the banking system.'

You can't get there from here, Michael. The road is littered with sacred cows -- talismans to ward off the Ghost of 1929.

MICHAEL: Okay, so what are we waiting for? A modern day version of the Conquistadors? A gang of trillionaires with AR-15s to come along and say it's nuts to throw virgins off cliffs?

PUNDITA: [laughing] Listen, I got up at 4 in the morning to watch the news from Europe. I need chocolate and caffeine.

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THX 1138 Society

I can't remember the exact month in 2012 when this conversation with Michael Wright took place but I'd guess it was around July-August. At the time I was blowing off steam, saying I was going to quit the USA for good.
*******

MICHAEL: Why don't you just stock up on guns and MREs? This way, if the worst case doesn't materialize you'll have saved yourself the hassle of relocating to another country.

PUNDITA: It's not going to happen that way, if you're visualizing a society descending into anarchy. The Department of Homeland Security is going to make sure of that. Washington, DC ain't Cairo. Metro is already preparing to install eyes in the sky on every subway car in the Washington, DC system -- and not just one per car. A local reporter asked some people on the street what they thought about putting cameras in subway cars. They thought it was a great idea. The buses will be next. We have the Black Bloc and other professional mayhem makers to thank for that. Law enforcement has gotten very efficient at containing mass violence, and they're getting more efficient by the day.

MICHAEL: I think you said at the time that the CCTVs blanketing London weren't any help in stopping the [2011] riots there. And you told me there were so many rioters the justice system was overwhelmed when they finally did catch people through the camera system. Most of them were never arrested, few of the cases the police could make went to trial.

PUNDITA: Scotland Yard was sucker punched. I'd like to see the rioters try a second time. Law enforcement is a fast learner these days because of the terrorism angle. Of course there are cities like Oakland where the mayor sees rioters as exercising their constitutional rights, but those are in a tiny minority. We might see a few hot spots, but there will never again be another Rodney King Riots in the USA, or even the widespread looting that happened in Manhattan during the second blackout there.

MICHAEL: What about the looting in New Orleans when Katrina struck?

PUNDITA: Again, law enforcement is a fast learner. The last time the city was emptied ahead of a hurricane there wasn't a replay of 2005; the mayor put the city on lockdown. Bloomberg put New York City on lockdown ahead of Superstorm Sandy. He did the same for the last hurricane that threatened the city.

We're not heading into a "Mad Max" future. We're heading to THX 1138.

Workers at Google and several other big U.S. companies are happy with benefits like health club, child care, grocery delivery, and maid and laundry service and a bunch of other perks in lieu of hefty pay raises.
Safety. Security. Convenience. The company insuring that its employees can live above their means. What more could one ask of a rule of the people?

As for the drugs aspect of THX 1138, it just hasn't been melded yet into the workforce system except in a roundabout fashion. If an employee exhibits behavior that clearly interferes with his work or with coworkers, it can be cheaper to recommend in a nice way that he see a psychologist if he wants to keep his job. The psychologist sends him to a psychiatrist, where he learns that he needs antidepressant or anti-anxiety medication or both and maybe anti-psychotic medication as well and toss in sleeping pills -- and often the psychologist step can be skipped.

As for the nasty police robots in THX 1138, that won't be necessary once Americans have graduated from the U.S. college system as it's evolving. You get 'em used to the good life young. Free health clubs, free beauty spas, free gourmet coffee -- well, not exactly free, but part of the college education that an applicant's student loan pays for.

MICHAEL: The coal mining company store, updated.

PUNDITA: Yes; someone should dust off that old song. How did it go? "I owe my soul to the company store?"

MICHAEL: It's called Sixteen Tons. It wasn't just the company store. The coal miners weren't paid in money; they were paid in chits, scrip, for everything, including housing. They couldn't save any money. The coal town stores jacked up the prices, so the miners were always in debt, borrowing against their next pay period. It was indentured servitude. I know you don't like labor unions but the unions put a stop to that.

PUNDITA: Then what happened? The pension fund. Then there was still no need to save. So transfer your revolving debt from the company store to Penny's and Sears.  This wasn't only the union funds.  The big white collar employers set up pension funds they paid for.  No need to save; you go get yourself up to your eyeballs in debt and we'll look after you in your old age. 

MICHAEL: It was a big step up from debt bondage.

PUNDITA: Really? How long did the pension system last before it crashed? A quarter century? You don't see the sleight of hand? The cage keeps getting prettier but it's still the same cage. Then Americans ask, 'What's happening to our freedom?' What do you need freedom for, if the company provides your dog with free pedicures?

MICHAEL: Man, someone had too much prune juice for breakfast.

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